Sales Report: Hired Hands

As their first FDA approvals approach and it's time to start calling on doctors, biotech companies often consider whether or not to "go it alone" in building their own sales forces. Doing so can be a daunting proposition, especially as the success of the product is uncertain. Yet the most common alternative—negotiating with "big pharma" to share sales force time—can compromise the brand's success and the biotech's options for future negotiations. For many, a useful solution is a middle course: hiring a contract sales organization (CSO) to lease "feet on the street" that will aid the product's launch.

While it's true that some biotechs have become major pharmaceutical players, the more typical biotech is a relatively small, often venture-capital-funded enterprise, centered around scientific brilliance. That makes creating a new sales force a tough task. In the land of pre-commercial biotech, the lab, not the sales force, is king, and much of investors' capital may have been “burned” funding clinical investigations and registration trials to gain FDA approval. There may be little left for the startup costs of creating a new sales force.

And the skills may be in short supply. While many biotech executives have big-pharma experience, most have worked with sales organizations already in place; few have built one from scratch. Consider the risks and burdens of creating a brand-new sales organization: hiring the right managers and reps, purchasing the right software, developing territory plans and call agendas. Then compound the challenge with teaching cutting-edge science that must be communicated by the reps.

For these and other reasons, many biotechs have elected to co-market their products with well-established pharma companies. There are pluses to this strategy. The big-pharma logo on the business card, for example, lends credibility to the rep, who may already have strong relationships with high prescribers (based on complementary products). Call planning, territory mapping and field reporting become the partner's problem, not the biotech's. And adding a hot biotech product to an aging portfolio can work to big pharma's advantage.

But biotechs need to consider how much control and influence they can exert on reps who don't report to them and may have little stake in the outcome. If appropriate quotas and strong financial incentives don't sustain rep commitment, the biotech's brand can end up getting the short end of the script in the doctor's office.

There's also risk of leaving a lot of revenue on the table by executing an exclusive agreement with one big-pharma partner before the full commercial potential of a biotech product has become clear through actual sales trends. And biotechs need to think long and hard about the potential damage to their brand if a big-pharma partner is tainted by bad publicity, or if its priorities are shifted by leadership changes. The convenience of a big-pharma partnership could prove costly indeed.

The contract sales solutionFor a biotech that's not ready, yet, to create its own field force or settle into an asymmetric marriage with big pharma, contract sales has several potential advantages:

Up and running: Startup costs are minimal because the management structure, human resources, IT infrastructures and all of the other vital details of a sales force are in place already. The CSO has already figured out the problems associated with creating a strong field presence.

Economies of scale: By amortizing costs over several engagements, and not just a single sales organization, CSOs can field a sales force for about the same as it would cost a biotech to run its own team—but without the one-time expenses of starting from scratch.

Flexibility and scalability: CSOs allow biotechs to field only a small sales force at first—say, pre-launch, to establish relationships with key physicians—then quickly ramp up once approval is secured.

Commitment: While the reps technically work for the CSO, they're committed to the success of the client's product. For each CSO rep, good performance could eventually lead to a permanent position with this biotech.

Technical support: CSOs offer the latest territory mapping and contact management software—and support it. Reps and managers arrive with expertise in entering and analyzing the data.

Variable vs. fixed expense: CSOs tend to offer flexibility in accounting, so biotechs can adjust how they expense the sales force.

Conversion/rollover options: Many CSOs provide the option of turning over sales forces to their clients when the time is right—complete with the sales management and IT infrastructure that's been built to support them. This can be a time-efficient and cost-effective way to tap the needed expertise when an organization is rapidly growing.

Are all CSOs alike?There are special considerations for biotechs. The biotech sale isn't a typical detail for a traditional, mainstream, primary-care pharmaceutical; it is much more of a dialogue and an education (for the physician), in which new science, new ways of thinking and new economic considerations all have to be thoughtfully weighed. Biotech salespeople must have the skills to be counselors and consultants, not just “detailers” who visit with little more than a sales aid and a few samples. And like people who sell medical devices, biotech reps need to be able to close the sale—which may often run into thousands of dollars for a single course of therapy, and which may be purchased outright by the physician or health facility being called on.

The CSO should also provide reps with well-established physician relationships in the relevant specialties, so their personal link can stand in for the imprimatur of a well-known pharma company. And they should be well-trained in the therapies and disciplines of the market.

The CSO should also offer medical sales liaisons (MSLs) for early-stage, pre-approval assignments and science-driven dialogue. One biotech with innovative products for sleep disorders leased an MSL-only sales force to call on psychiatrists and sleep labs during the nine months prior to launch, conditioning the market for rapid product acceptance. Others have used contract MSLs to dialogue with physicians about emerging indications, to pave the way for rapid formulary acceptance: unlike big pharma, revenue-hungry biotechs can't wait months for formularies to get around to reviewing their products.

They should also have systems and safeguards in place for sample management, including compliance with PDMA regulations and guidelines—especially important given the potentially high value of biotech samples and the risk of diversion.

And because biotech is seen as the cutting edge of medical progress, the CSO should provide reps who are well-versed in the latest selling tools, including tablet PCs and other technology-based sales aids.

The CSO option isn't for everyone, but it does offer potential advantages to biotechs who need to manage an uncertain world with a high degree of flexibility, helping them to stay focused on their core competencies: bringing dramatically innovative therapies to market.

Roland Collado is president of OnCall LLC

SIDEBAR: CSO for Biotech: A checklist

■ Can the CSO provide reps who dialogue, not just detail? Biotech calls for much more two-way discussion and learning than the typical primary care product.

■ Are they comfortable with innovative sales technology? From online call reporting tools to tablet PCs, biotech reps are expected to be the technology leaders among sales professionals.

■ Are their reps trained to close the sale? Look for companies with direct sales experience, with clients in medical devices or products purchased by physicians and hospitals, to provide the needed expertise for biotech.

■ Can you roll over the contract reps when you're ready to have your own sales force? This option provides continuity and expertise—a double win.

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